Buying California Distressed Notes

Buying distressed assets is complete different aspect within the Real Estate industry. There are many different asset classes for the investor to chose from. The investor can choose from the following asset classes: Office Buildings, Commercial Buildings, Multi Tenant, Strip Malls, Shopping Centers, Single Family Homes, Condos, Apartment Buildings and many more. The most common in Southern California is (SFR) single family residences or as we call it in the business resi or sfr. Many Capital Companies and Hedge Funds are buying up all of the available sfr in So Cal.

Some companies business model is to purchase (npns) non-performing notes which are secured by the hard asset, which could be a sfr or commercial. Purchasing npns is a very complex process as you have to know the laws of the state you are purchasing in. The other critical aspect is to line your self up with a servicer that is HAMP approved. The average cost per month on servicing the paper is $95.00 a month. Now that you have purchased the npn you have to analyze the note in order to structure it for repositioning. Many investors will either foreclose on the property or lease back to the now tenant previous seller.

Buyer beware as in any Real Estate transaction as this space is not regulated and there are many individuals and groups who claim that they are the Seller or have the product and do not. Make sure any investor who is interested in purchasing notes does their research on the company who is Selling them the notes. Investors need to be able to work directly with the Seller and avoid "Dasiy Chains".

Written By David R. Indermill

July 6th 2012

How To Flip a Property

Their are many moving parts in the process from start to finish when you begin to flip a property. When you are starting you need to assess the entire process. Before anyone tries to flip a home, they need to know all of the intricate details before starting or they can loose out big time. It is not as easy as many people think based on watching reality shows that flip homes.Sometimes you have tenants and the property is for rent, and you need to calculate the cost of relocating the tenants. Other times the property is vacant and you can assess the property and put a punch list together for the rehab in order to increase the property value.

Upon determining the location and type of property, you can start searching through different resources. Some of these resources can be Realtors that have Short Sales that need offers. Another great source would be connecting with distressed home owners and asset managers, to see if they have any properties they need to liquidate. Now that you have determined the occupancy, location and type of property,  it is time to number crunch. Some investors have to get a 25%-30% ROI, and others are OK with a 8%-20% return on the investment.

Now that you have found a great potential flipping home, you now have to do a cost breakdown of the improvements you need to do in order to maximize the profit. The best case would be to find a home that you can purchase 25%-35% under current market value that only needs $15K-$25K for rehab costs and the acquisition price is under $400K. The reason that you want to target homes to purchase between $250K and $350K, is that they are easier for the retail buyer to obtain a home loan. There are many savvy investors in San Diego Ca that average $30K-$60K + profit per home that they flip.

The key ingredient is buying them at the right price, location and allowing for rehab costs and any surprise improvements needed that they still make a healthy profit. This business model is a proven one, and for the last several years the competition is fierce. You need to make sure when you list it and put it on the open market, that you are able to be competitive with the other similar homes, based on size, location and condition. Lastly, when it is ready to sell the home for a profit, interview several agents in your area and go with you feel comfortable with, and that has a great track record with closing deals.

Written By David R. Indermill
6/29/12